Phage-based Escherichia coli homologous recombination systems have recently been developed that now make it possible to subclone or modify DNA cloned into plasmids, BACs or PACs without the need for restriction enzymes or DNA ligases. This new form of chromosome engineering, termed recombineering, has many uses for functional genomics, including generating transgenic and knockout targeting vectors, and for identifying long-range regulatory elements and functional domains in genes. During the past year we described a new recombineering-based method for generating conditional mouse knockout (cko) mutations that uses gap repair to subclone DNA from BACs into high copy plasmids, and homologous recombination, and Cre or Flpe recombinases, to introduce loxP or FRT sites into the subcloned DNA. Unlike previous methods that use short 45-55 bp regions of homology for recombineering, our method uses much longer regions of homology. We also made use of several new E. coli strains, in which the proteins required for recombination are expressed from a defective temperature-sensitive lambda prophage, and Cre or Flpe recombinases from an arabinose inducible promoter. We also described two new Neo selection cassettes that work well in both E. coli and mouse ES cells. Our method is fast, efficient, and reliable and makes it possible to generate cko-targeting vectors in less than two weeks. In addition, it should facilitate the generation of knock-in mutations and transgene constructs, as well as expedite the analysis of regulatory elements and functional domains in or near genes.